Personal Loan to Reduce Variable-Rate Mortgage

stattman

It seems to be the case where there are (still) some competitive (fixed rate) Personal Loans available which would help offset the bulk of my remaining mortgage, which will be affected as the BoE rates go up.  So all things being equal and accepting the golden rule that mortgages are a cheaper form of borrowing than loans (which here is not the case);   (I've checked with my mortgage provider and there are no penalties for paying lump sums to reduce the amount). Not sure what I'm missing? Are there any restrictions in being able to do this debt-consolidation? (There are some caveats about not allowing a loan to be used to purchase a property / mortgage deposit it seems). 

savingholmes

I think it depends on the size of your mortgage and how easy it is for you to borrow £ and at what rate. I personally would consider loans and CCs when my mortgage is small enough. Another question is whether the loan would result in a charge on your house or be independent - if independent - it may in some ways reduce your risk as the size of the charge on your home would reduce.

Also remember with loans or CC balance transfer the way the interest may be applied is different... With CC's the cost is more upfront rather than the mortgage daily example... 

In the past I've had CC's with zero balance transfer fee which is an option I'd consider too. 

You have to do the maths on your circumstances and be sure that you can pay everything off within the required time.